Leading engineering conglomerate Escorts Kubota Limited (EKL) on Wednesday said it has entered into a business transfer agreement with Sona BLW Precision Forgings Limited (Sona Comstar) to transfer the existing Railway Equipment Business Division (RED) as a going concern on a slump sale basis, for a cash consideration of ₹1,600 crore.

The expected date of completion of sale/ disposal is September 30, 2025, subject to the terms of the agreement, the company said in a filing to stock exchanges.

“In line with our strategic focus on the Agri and Construction equipment sectors, EKL has decided to divest its Railway Equipment business. This strategic shift is aimed at simplifying operations and capital reallocation, leading to an increase in scale and efficiency of the core businesses, the company said.

RED is one of the railway component suppliers in India for products like brakes, couplers, suspension systems, and friction and rubber products. It also has a few new products in the pipeline, including HVAC systems, electrical control panels, vacuum evacuation systems, and automatic plug doors.

“With a renewed focus on core business divisions, EKL aims to maximise value for stakeholders and solidify its position as a leading player in the Agri and Construction Equipment Industry,” said Nikhil Nanda, Chairman and Managing Director of EKL.

The Railway Equipment Business Division aligns with the vision of Sona Comstar as they intend to expand into the broader mobility sector, and it will enhance their clean mobility product offerings by adding railway components business, the company said.

Morgan Stanley India is the exclusive financial advisor to EKL on this transaction, the company informed adding that DMD Advocates is the company’s Legal Advisor, while Transaction Square LLP is the financial and tax advisor.

Shares of EKL closed at ₹3,702.65 apiece on the BSE on Wednesday, up 0.84 per cent from the previous close.

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